Para 2.6.5 — MSO (Audit)
Original Rule Text
2.6.5 Where the amount of grants and /or loans from the Consolidated Fund of India or of a State or Union Territory having a Legislative Assembly, as the case may be, to a body of authority in a financial year is less than 75 per cent of its total expenditure during that year, Sub-section (2) of Section 14 empowers the Comptroller and Auditor General to audit all its receipts and expenditure with the previous approval of the President or the Governor of the State or the Administrator of the Union Territory, as the case may be, if the amount of such grants and/or loans was not less than Rs one crore. However, if the amount of grants and/or loans is not less than Rs one crore and also forms not less than 75 per cent of the total expenditure of the institution, it will attract audit by the Comptroller and Auditor General under Sub-section (1). Only when the later part of this condition is not satisfied, audit under Sub-section (2) will arise. Once an institution comes under the audit of Comptroller and Auditor General by virtue of the provisions of Sub-section (1) or (2) of Section 14, such audit will continue for two more years following under Sub-section (3), even if the conditions prescribed in Sub-sections (1) and (2) are not fulfilled in those years.
Note: The provisions of Sub-sections (2) and (3) of Section 14 referred to above are applicable only with effect from the financial year 1983-84.
- B. Audit under Section 15
What This Means
If a body receives a government grant/loan of Rs 1 crore or more but the amount is less than 75% of its total expenditure, the CAG can still audit it under Section 14(2) — but only with prior approval of the President, Governor, or UT Administrator. Once a body comes under CAG audit through either Section 14(1) or 14(2), the audit continues for two additional years even if the funding conditions are no longer met in those years.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Section 14(2) applies when grant/loan >= Rs 1 crore but < 75% of total expenditure
- 2Requires prior approval of President/Governor/UT Administrator
- 3If grant >= Rs 1 crore AND >= 75%, Section 14(1) applies automatically instead
- 4Section 14(3): audit continues for 2 more years even if conditions lapse
- 5Sections 14(2) and 14(3) apply only from financial year 1983-84 onwards
Practical Example
A government-funded hospital trust receives Rs 1.5 crore as a grant, but its total expenditure is Rs 5 crore (grant is only 30%). Section 14(1) does not apply (below 75%). However, since the grant exceeds Rs 1 crore, the CAG approaches the President seeking approval to audit the trust under Section 14(2). Once approved and audit begins, even if the grant drops to Rs 50 lakhs in the next two years, CAG continues auditing under Section 14(3).
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why does audit continue for two extra years after conditions lapse?▼
What is the difference between Section 14(1) and 14(2)?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.